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Compuware getting second looks from private-equity firms

Compuware Corp., a takeover target last year, held out for a better offer and never got one. Now a pair of private-equity funds are giving it a second look.

Vista Equity Partners LLC and Thoma Bravo LLC are reviewing the company's finances, according to people with knowledge of the matter. The interest doesn't mean a sale is imminent, and no active talks are underway, the people said, asking not to be named discussing private information.

Still, companies such as Compuware that sell software to businesses have the potential to generate high profit margins, making it a potential turnaround opportunity, one of the people said. Compuware's margin on earnings before interest, taxes, depreciation and amortization is just more than 16.4 percent, compared with an average of 23 percent at 13 of its U.S. peers, data compiled by Bloomberg show.

The Detroit-based company spurned an offer from activist shareholder Elliott Management Corp. in January 2013 and said it would evaluate any credible bids. None materialized, and it has instead focused on cutting costs and selling or spinning off units including cloud-computing business Covisint Corp., which conducted an initial public offering in September.

Compuware reached an accord with Elliott this year that staved off a fight for control of the board, as Chief Executive Officer Bob Paul continues to try to show shareholders that he can increase returns without a takeover. Compuware's management is continuing to operate under the assumption that no deal will be done because even after several companies expressed interest in the past year, nothing has come to fruition, two people said.

Compuware has "no active buyers interested in the company," according to Lisa Elkin, a spokeswoman. "The CEO continues to focus on accelerating growth, profitability and shareholder value," she said in an email. Representatives for Elliott, Thoma Bravo and Vista declined to comment.

Bain Capital Partners LLC and Golden Gate Capital Corp., which explored a deal last year, have decided not to bid, according to the people familiar with the situation. Bain and Golden Gate were viewed as the frontrunner because they could combine the company with its larger peer BMC Software Inc., which the group bought for $6.9 billion in May.

Compuware hired Goldman Sachs Group Inc. in 2012 to help it review Elliott's bid, people familiar with the situation said at the time. The New York-based bank is still working with Compuware as a financial adviser, the people with knowledge of the situation said. A spokesman for Goldman Sachs declined to comment, as did representatives for Golden Gate and Bain.

Elliott offered to buy the company early last year for $11 a share, valuing the company at about $2.3 billion, and advocated for it to combine with BMC, which was also put on the block after receiving pressure from Elliott, Paul Singer's New York-based hedge fund. Compuware closed at $10.56 Thursday in New York, down about 6 percent so far this year.

San Francisco-based Vista, which manages almost $8 billion in committed capital, invests largely in software and tech-enabled businesses, according to its website. Thoma Bravo, based in Chicago, manages about $4 billion in assets.